4 May, 2016, Sydney, Australia – A surprise interest rate cut to a new historic low of 1.75% has borrowers scrambling to refinance their home loans, according to finder.com.au, one of Australia’s biggest comparison websites.

In the 24 hours since yesterday’s announcement, 11 lenders, including the Big 4, have come to the party by announcing they will pass on cuts to their home loan customers. Most are passing on the 0.25% in full, while ANZ has announced a 0.19% reduction.

Bessie Hassan, Money Expert at finder.com.au says: "While this outcome sounds promising, it represents just 15% of all home loan providers onfinder.com.au's database. Of the 74 providers on our database, there are 63 who are yet to make any announcement regarding passing on a cut to their home loan customers. What are they waiting for?”

Lenders who have announced cuts

Monthly (and yearly) savings for various loan sizes

Bank

Change

New Rate

$250k Loan

$500k Loan

$750k Loan

$1M Loan

ANZ

-0.19%

5.37%

$29.75 ($357)

$59.50 ($714)

$89.25 ($1071)

$119.00 ($1428)

Bank of Queensland

-0.25%

5.61%

$39.67 ($476)

$79.35 ($952)

$119.02 ($1428)

$158.70 ($1904)

Bank of Melbourne

-0.25%

5.35%

$39.16 ($470)

$78.33 ($940)

$117.49 ($1410)

$156.65 ($1880)

bankSA

-0.25%

5.42%

$39.30 ($472)

$78.60 ($943)

$117.91 ($1415)

$157.21 ($1886)

CBA

-0.25%

5.35%

$39.16 ($470)

$78.33 ($940)

$117.49 ($1410)

$156.65 ($1880)

NAB

-0.25%

5.35%

$39.16 ($470)

$78.33 ($940)

$117.49 ($1410)

$156.65 ($1880)

Newcastle Permanent

-0.25%

5.05%

$38.56 ($463)

$77.12 ($925)

$115.67 ($1388)

$154.23 ($1851)

RAMS

-0.25%

5.30%

$39.06 ($469)

$78.13 ($938)

$117.19 ($1406)

$156.25 ($1875)

St George

-0.25%

5.44%

$39.34 ($472)

$78.68 ($944)

$118.02 ($1416)

$157.37 ($1888)

Westpac

-0.25%

5.43%

$39.32 ($472)

$78.64 ($944)

$117.97 ($1416)

$157.29 ($1887)

Ubank

-0.25%

4.17%

$36.69 ($440)

$73.38 ($881)

$110.06 ($1321)

$146.75 ($1761)

Average

-0.25%

4.87%

$38.19 ($458)

$76.37 ($916)

$114.56 ($1375)

$152.75 ($1833)

Source: finder.com.au

State by state

Monthly (and yearly) savings across the states, based on average loan sizes

Bank

National $357k

NSW $416k

VIC $367.9k

QLD $305.4k

SA $277.8k

WA $331.8k

TAS $227.9k

NT $310.5k

ACT $346.6k

ANZ

$42.51 ($510)

$49.54 ($594)

$43.78 ($525)

$36.34 ($436)

$33.06 ($397)

$39.48 ($474)

$27.12 ($325)

$36.95 ($443)

$41.24 ($495)

Bank of Queensland

$56.69 ($680)

$66.07 ($793)

$58.38 ($701)

$48.47 ($582)

$44.09 ($529)

$52.66 ($632)

$36.17 ($434)

$49.28 ($591)

$55.00 ($660)

Bank of Melbourne

$55.96 ($671)

$65.21 ($783)

$57.63 ($692)

$47.84 ($574)

$43.52 ($522)

$51.98 ($624)

$35.70 ($428)

$48.64 ($584)

$54.30 ($652)

bankSA

$56.15 ($674)

$65.45 ($785)

$57.84 ($694)

$48.01 ($576)

$43.67 ($524)

$52.16 ($626)

$35.83 ($430)

$48.81 ($586)

$54.49 ($654)

CBA

$55.96 ($671)

$65.21 ($783)

$57.63 ($692)

$47.84 ($574)

$43.52 ($522)

$51.98 ($624)

$35.70 ($428)

$48.64 ($584)

$54.30 ($652)

NAB

$55.96 ($671)

$65.21 ($783)

$57.63 ($692)

$47.84 ($574)

$43.52 ($522)

$51.98 ($624)

$35.70 ($428)

$48.64 ($584)

$54.30 ($652)

Newcastle Permanent

$55.09 ($661)

$64.21 ($770)

$56.74 ($681)

$47.10 ($565)

$42.85 ($514)

$51.17 ($614)

$35.15 ($422)

$47.89 ($575)

$53.46 ($641)

RAMS

$55.81 ($670)

$65.05 ($781)

$57.49 ($690)

$47.72 ($573)

$43.41 ($521)

$51.85 ($622)

$35.61 ($427)

$48.52 ($582)

$54.16 ($650)

St George

$56.21 ($675)

$65.51 ($786)

$57.90 ($695)

$48.06 ($577)

$43.72 ($525)

$52.21 ($627)

$35.86 ($430)

$48.86 ($586)

$54.54 ($655)

Westpac

$56.18 ($674)

$65.48 ($786)

$57.87 ($694)

$48.04 ($576)

$43.69 ($524)

$52.19 ($626)

$35.85 ($430)

$48.84 ($586)

$54.52 ($654)

Ubank

$52.42 ($629)

$61.09 ($733)

$53.99 ($648)

$44.82 ($538)

$40.77 ($489)

$48.69 ($584)

$33.44 ($401)

$45.57 ($547)

$50.86 ($610)

Average

$54.56 ($655)

$63.59 ($763)

$56.20 ($674)

$46.65 ($560)

$42.43 ($509)

$50.68 ($608)

$34.81 ($418)

$47.43 ($569)

$52.94 ($635)

Source: finder.com.au

With more lender announcements due in coming days, the home loan market is on high alert for a rush of mortgage customers looking to refinance or fix their loans.

In a sign borrowers will be enticed to get a better deal, there has already been a 40% increase in the number of customers looking to refinance on finder.com.au following yesterday’s announcement.

The page on the finder.com.au website dedicated to fixed rate break costs has seen a whopping 250% spike in traffic.

Ms Hassan says while the rate cut is mostly good news for borrowers, now is the time to see what else is out there.

“Now that home loan customers have had time to digest the record-low level they are starting to look at what interest rate they are paying and may be questioning why they’re paying so much,” she says.

“Particularly for those whose lenders are yet to announce a cut, or pass it on in full, customers will want to explore their refinancing options.

"While a rate cut that mirrors the RBA's cut of 0.25 % is of course welcome news, it's important to focus less on the rate your lender has cut by and more on the overall rate on offer.

“If you're not satisfied, a better rate is worth pursuing – a small change to your interest rate can save you thousands of dollars in the long run. And of course if your lender hasn't yet announced a cut, get in touch and demand a discount.

“With so much choice in today's market, now is an exciting time for borrowers and they shouldn't be taken advantage of by lenders who are taking their time passing on rate cuts.”

Ms Hassan says customers will need to wait at least nine days for banks to pass the rate drop on. ANZ’s rate drop is the first to come into effect on Friday 15 May 2016.

“Home owners could be pocketing almost $55 a month extra on the average mortgage, but there's a big difference between when these interest rates will be effective, so check with your lender on when they will be passing on its rate cut before making the switch.

“Variable rates will be the first to come down, so homeowners have a bit of breathing room before they have to rush into fixing interest rates.”

Also keep in mind that there may be another rate cut to come, says Ms Hassan.

“The unexpected decision to drop rates to 1.75% has opened the gates for one more rate cut.

“In the past five years a rate cut has nearly always followed up with another cut within a few months,” she says.

“The general consensus among experts is that the RBA will ease interest rates another 25 basis points, to 1.5% following the release of Consumer Price Index data in August.”

For further information

The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.

About finder.com.au:

finder.com.au is one of Australia’s biggest comparison websites and has helped over 4.8 million Australians find better credit cards, home loans, life insurance, shopping deals and more since 2006. finder.com.au compares 250 credit and debit cards from 31 providers, over 300 home loan products, and information from 13 life insurance providers as well as online shopping promo codes, mobile phone plans, travel insurance and more. One Australian every five minutes is using finder.com.au or creditcardfinder.com.au to find better (Source: Google Analytics).

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